Panel 5: Political And Economic Reforms In Latin America Wednesday, April 19 th (3:00-4:15pm)

1. 13th Symposium on Development and Social Transformation Panel 5: Political And Economic Reforms In Latin AmericaWednesday, April 19th (3:00-4:15pm)

2. 13th Symposium on Development and Social Transformation Panel 5: Political And Economic Reforms In Latin America Reparations: Key To Reconciliation In PeruMarcela Guerrero Casas

3. Peru’s Truth and Reconciliation Commission (CVR) Reparations : The key to reconciliation? Marcela Guerrero Casas Maxwell School of Citizenship and Public Affairs Syracuse University April, 2005

5. Overview • Historical context • What are reparations? • Peru’s Comprehensive Plan for Reparations (PRI) • Challenges for implementation

7. Comisión de Verdad y Reconciliación (CVR) • Established in June 2001 • Composed by 12 members • Mission: to analyze crimes and human rights violations from 1980 and 2000, to hold public audiences, realize exhumations, national process of violence, regional histories and institutional reforms • Estimated 70,000 deaths. 54% (Shining Path PCP-SL), less than 2% (Túpac Amaru Revolutionary Movement (MRTA), and the rest by government forces or rondas

8. What are reparations? • Restorative justice mechanism • Protected and mandated under international law (Rome Statute, Declaration of Human Rights, Convention against Torture, etc.) • Material reparations: rehabilitation, restitution and compensation • Symbolic: memorials, museums, exhumations, etc.

9. Peru’s Comprehensive Plan for Reparations (PRI) • Established on July 20, 2005 • Who is eligible? Forced disappearance, abduction, extrajudicial execution, murder forced displacement, arbitrary detention, torture, forced displacement, etc. • Five-dimensional framework: psycho-social, participatory decision-making, intercultural sensitivity, gender equality and symbolism.

10. PRI • Categories: • Symbolic -December 10 -Day of National Reconciliation • Health -training of physicians, community interventions • Education - adult education, scholarships, fee waivers • Civil rights -legal status of the disappeared, removingn criminal records of those unjustly imprisoned, etc. • Economic • Collective -community-based programs

11. Challenges • Budgetary constraints • Individual financial reparations • Are the victims psychological ready? • Is it economically fair? • It could divide society rather than promote national unity

12. 13th Symposium on Development and Social Transformation Panel 5: Political And Economic Reforms In Latin America A Proposal To Reform The Presidential Houses In Latin AmericaGuillermo Gonzales Arica

13. A proposal of modernization of Presidential Houses in Latin America to obtain a better Presidential Decision Making System Guillermo Gonzales-Arica

14. Overview • Introduction • Four principal aspects to be considered in a modernization process • Functions that support presidential duties • The role of the Chief of Cabinet or Prime Minister • The role of Presidential Office and his advisors • The relationship with the Parliament • The need of a good Communications Policy • Conclusions • Recommendations

15. Introduction • Democracy in Latin America • Perception and acceptance of democratic governments in Latin America • Latin American counties count with a Presidentialist Constitutional regime. Presidents have important legal duties and power. • The region’s political tradition of caudillos (individualist leaders with charisma)

16. Four principal aspects to be considered in a modernization process: • The role of the Chief of Cabinet, • The role of the Presidential Office and his advisors, • The relationship with the Parliament and • The need of a good Communications Policy.

17. Functions that support presidential duties • Establish a permanent relation with the Congress. • Coordinate the Government State Policies. • Give legal advisory to the President. • The elaboration of strategic studies about the political and social situation.

18. The role of the Chief of Cabinet or Prime Minister • The President should share power with the chief of the cabinet. • President’s representative in the Parliament • Coordination of the application of State Policies • Lead the follow up of the legislative production

19. The role of Presidential Office and his advisors • Conflicts between advisors and cabinet of ministries • Presidential Houses Vs Ministries • Advisors should feel passion for the anonymity • Presidential advisors, their power and constitutional responsibility and liability.

20. The relationship with the Parliament • Pressures, communication an relationships • White House case (Reagan) • Inter-branch cooperation (Chile) • Congressional control

21. The need of a good Communications Policy • Presidential Press Offices • Avoiding contradictions “Preventing leakage” • Role of spokespersons • Governmental achievements in the media

22. Conclusions • Presidents in the Latin American region have a huge amount of responsibilities and concentrate too much power. • The Prime Ministers or Chiefs of Cabinet in most of the countries of the region have many other responsibilities besides coordinating the work of the rest of members of the Cabinet • When the Presidential team of advisors gains much more influence and power for decisions than the Chief of Cabinet or Prime Minister, the effectiveness of the Government’s work is negatively affected • The distance or lack of periodic dialogue between Presidential advisors, Members of Cabinet and Members of the Parliament that belong to the Governmental group puts in risk the accomplishment of the Government Action Plan

23. Recommendations • The Presidents need to delegate more responsibilities to the Chiefs of Cabinet or Prime Ministers. • The Chiefs of Cabinet or Prime Ministers must be focused in a team work with the President • The Presidential advisors must work in coordination with the Chief of Cabinet. • Periodic work meetings, having an established agenda should be hold between the Chief of Cabinet and its members, Presidential advisors and Members of the Parliament that belong to the Governmental political group. • The Presidential Houses or the Offices that supports the Presidents’ work should organize those meetings. • Periodic meetings, focused in the Government’s Action Plan should be hold with the main representatives of the national and international media, organized by the Presidential Houses. • International Organizations, such as the World Bank, Inter American Development Bank, the Organization of American States and the United Nations must be called by the Governments in the region to focus their technical and financial support in the modernization of the Presidential Decision Making Models. • The Presidents members of Grupo de Rio (Group of Rio, a regional mechanism of consultation that gathers 19 Presidents in the Latin American region) should reserve a space in their next Summit to make an analysis and encourage a debate about the role of the Presidential Houses or the Presidential Decision Making Systems in the achievement of their main governmental goals.

24. Thank you!

25. 13th Symposium on Development and Social Transformation Panel 5: Political And Economic Reforms In Latin America The Colombian Development Experience: Trade-offs And Mixed ResultsJonathan Gupton

26. Colombia: Rural to Urban Migration and the Informal Sector Jonathan Gupton April 19, 200 Maxwell School of Citizenship –Syracuse University

27. Colombia’s Informal Sector • Informal Sector: sector of economy • that does not comply with labor • market legislation and does not • provide worker benefits. • It is estimated that between 50 and • 60% of the labor force in Colombia • is employed in the informal sector. • Negatives: unregulated hours and • working conditions, often subject to • harassment from authorities or • exploitation from bosses trying to circumvent • labor unions. • Positives: largely voluntary, ideal for workers (especially female) that put a high • premium on flexible hours. Provides temporary cushion against loss of job due to • trade reforms.

28. Labor Participation vs. Employment Rate • 7 Cities: • Bogotá • Cali • Medellín • Barranquilla • Cartagena • Bucaramanga • Cucuta Source: Flóres, Universidad de los Andes, Colombia (2003) • labor participation rate generally increased, but not necessarily in the • same fashion as the employment rate.

29. Unemployment vs. Informal Employment Source: Flóres, Universidad de los Andes, Colombia (2003) • For the same set of 7 cities, Overall correlation between recent rises in • unemployment, underemployment, and informal employment.

30. Why is the informal economy so large in Colombia? • Most explanations center on 2 key factors: • Reduction of trade barriers (liberalization) leading to decreasing demand for labor • Increasing supply of labor in recent years (after an initial slowdown in the 80s and 90s) due to an elevation of displaced persons in conflict areas. • Import penetration increased from around 20% in 1984 to over 30% in manufacturing in Colombia; • For comparison, in Brazil, it grew from 5.7% in 1987 to 11.6% in 1998. • Sebastian Edwards (1999), along anecdotal evidence suggest that unions do not have significant power in most Colombian industries (public sector and the petroleum industry are an exception), while in Brazil the evidence suggests that unions played a much more integral role in labor negotiation.

31. Shift in sectors – Rural to Urban migration Source: Departamento Nacional de Planeación, Plan de Economía Social, Agosto 1987, Bogotá, 1987, 168.

32. Informal Economy spike in late 90s • The Colombian government, DANE (Departamento Administrativo Nacional de Estadística), defines informal employment as: “self employed workers different from independent professionals, family workers, domestic servants, and paid workers in small firms (up to 10 workers).” • Labor Demand decrease in the late 90s: financial crises of late 90s, macroeconomic effect on overall economic ouput and international capital flows. • Labor Supply increase in the late 90s: increased access to government services such as health care, rural migrants from forced labor camps, escalating violence (not necessarily economic migrants).

33. Multiple Viewpoints • There are those that attribute this high unemployment and high informal sector employment to structural reforms in the economy, of the type outlines in the Washington Consensus or otherwise “neo-liberal” macro adjustments. • There are others which contribute this high migration strictly to a failure of Colombian, US, or international authorities to bring about a sustainable peace in the 40 year Colombian civil war. • There are others (Goldberg, Pavcnik, National Bureau of Economic Research, 2003), that suggest correlation between decreased tariffs and increased unemployment (or increased employment in the informal sector) is much weaker than is the correlation between labor market rigidities and increased unemployment.

34. Implications and Policy Tradeoffs • On one hand, informal sector, unregulated economics plays a vital role in the survival of many low-income households, distributing income perhaps more efficiently than the government. • Creates an environment for thriving small businesses. • On another hand, although there is a difference between an informal economy and an illegal economy, there often is an overlap. (already “concealed” informal sector provides cover for the illicit sector) • Also, the lack of regulation leads to problems such as lack of pollution control and environmental control. • On one hand, people are responding to incentives, utilizing human creativity and ingenuity, and and surviving with their small businesses, but on another hand, it allows the government to wash their hands from responsibility of rapidly growing urban poverty.

35. 13th Symposium on Development and Social Transformation Panel 5: Political And Economic Reforms In Latin America Banking Sector Reform In PeruJuan Carlos Izaguirre

36. BANKING SECTOR REFORM AND ITS ROLE IN DEVELOPMENT The case of Peru Juan Carlos Izaguirre April 19, 2006

37. Banking Reform - Timeline Banking Sector Reform • Liberalization of market • Improvement of supervisory and regulatory agencies Stabilization Program Fiscal/monetary equilibrium Economic growth Inter-national Crises Growth … and develop-ment? Economic Crisis Thread 1998-2000 2001-…. 1987-1990 1990-1993 1994-1997 Banking Sector • Improving supervisory schemes • International standards • Credit boom Banking Sector • Capacity of the state to resolve crisis • Minimized effects over economy Banking Sector Agenda • Agriculture • Small business • Interest rates

38. Economic Crisis1987-1990 • Banking System: High participation of the state • Interest rate ceilings • Subsidies • Taxes • Compulsory use of local currency • Multiple exchange rates Collapse of the banking system

39. Stabilization Program1990-1992 • Fiscal and monetary equilibrium policies • Banking sector (IADB, WB): • liberalization of interest rate, exchange rate • New Banking law (1991): more requirements for constitution of banks, openness to foreign capital, creation of deposit insurance fund, creation of database of debtors • Liquidation of most state banks in 1992 • New Central Bank law (1992): limiting role to preserve monetary stability • Modernization of Supervisory and regulatory agencies (IADB: $ 221’) • Reforms under Fujimori’s democratic period

40. Economic Growth 1994-1997 • Growth (7%) and fine-tuning of reforms • Banking sector: • Privatization of remaining state commercial banks (1994, 1995) • New Banking Law (1996): restricted participation of state in banking sector, application of International Standards of Supervision • Training Programs for supervisory agency • Outcomes:

41. International Crises Thread1998-2000 • “The Niño” climatic phenomenon • Asian, Russian and Brazilian financial crises • “Credit boom” in consumption sector, credit overexposure, bad governance of Peruvian banks  Regulatory agency capable of responding to thread (new mechanisms to resolve crisis) • 10 banks went out of Peruvian system, but no systemic risk • Minimum cost, compared to other Latin American countries.

42. Growth… and development?2001-…. • Continuous economic growth and better performance of banking sector Pending agenda: • From stabilization to further development • Agriculture, small business, low income sectors • Interest spreads • Limits of deposit insurance fund • Role of the state : direct lending Vs. reducing costs of transactions ??

43. BANKING SECTOR REFORM AND ITS ROLE IN DEVELOPMENT The case of Peru Juan Carlos Izaguirre April 19, 2006

44. 13th Symposium on Development and Social Transformation Panel 5: Political And Economic Reforms In Latin America Wednesday, April 19th (3:00-4:15pm)